The Fruits Of Op/Twist Continue To Ripe

We have noted repeatedly that Operation Twist served to benefit strategic areas (like housing) with its purchases of long dated Treasury bonds, which kept rates down on the long end. We have also noted that Twist sought to sanitize these asset purchases by selling short-term Treasury bonds to keep the yield curve tame and snuff out any inflation signals that would come from a rising money supply. Enter Goldilocks.

It's all lies. It is a painting rendered by a most brilliant of Fed chiefs playing tricks with the nation's bloated debt load. People are buying the stock market now and they (and their investment fund managers) probably don't give a damn about what created the rally. It's Goldilocks and that's all they are concerned with.

(click to enlarge)Click to enlarge

I distinctly remember watching the first yellow highlighted bullish pattern form. Here, don't believe me? I am a perma bear? Here's the post from back then (7.3.12):

I did not buy it because I find it difficult to buy things that I either don't believe in or are entirely dependent upon overly powerful people doing things that should be illegal in order to manage markets to desired outcomes.

But the chart was the chart and it was bullish. HGX has since gone on to much higher levels than I had anticipated as it carries along the absolute dumbest, most greedy money on the planet in tow. These people were hiding in foxholes last summer.

Just remember that if you want to go chasing this market. These people are your co-sponsors.

Risk vs. reward on the broad US stock market stinks. I was not afraid to call it bullish last summer and I am not afraid to call it what it is now.